The 3 Things An Underwriter Will Scrutinize

Here is a follow up on the article about the 11th hour credit repull.  So if we have a new credit re-pull before closing escrow to make sure you didn’t buy a Mercedes Benz, what are the 3 things that the Underwriter is looking for and what actions will the bank take?

What the Bank Will Do
Recalculate debt-to-income ratios, if that ratio exceeds Fannie Mae’s maximum threshold, the loan will be denied.  (I’m not sure what the maximum threshold is, but I’m looking into it.)

What You Should Do About It
Don’t run up credit cards prior to closing and try to pay more than the minimum due.

What the Bank Will Do
Use your new credit score to adjust the loan amount or deny the loan.

What You Should Do About It
Follow the basics on keeping your credit score high – pay your bills, don’t let things go into collection, don’t close up any accounts, and don’t get new credit cards unless you have to.  Myfico.com has an educational section on credit that hits all the key basic steps to a good credit score.

What the Bank Will Do
Look at the credit inquiry section of your report for undisclosed items.  If items are found, the bank will ask for supporting documentation.

What You Should Do About It
No new credit cards!  That is it and nothing else.  Just don’t do it!

All these steps may happen after the’ve already approved the loan, I’m going to assume that if you made it that far into escrow, you probably don’t want to fall out:)  Be careful, let escrow close.